Our Industry 2013 Syngenta

8/12/2019 Our Industry 2013 Syngenta

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Our industry2013


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2

1

0

1980 1990 2000 2012

* Corn, soybean, wheat and rice

Global demand of major grains*

billion tons, CAGR (% per annum)

Food

Feed

Fuel

~1.4%CAGR

2027

2004 2050

~70%

Global grain production

We need to grow more with less

Limited natural resources

Agriculture must meet rising demand for food, feedand fuel while protecting the planets natural resources

Expanding farmland increases environmental sustainability challenges Urbanization continues: by 2050, three billion more people are expected to be living in cities,

with urban sprawl further reducing arable land and putting biodiversity resources under stress Water scarcity: agriculture uses 70 % of the worlds fresh water

Global grain demand

Population growth and greater economic prosperityin emerging markets will drive future demand for foodand feed production

Population is growing: by 2050, global population will grow to greater than nine billion, morethan two billion additional people compared to today

Diets are changing: demand for meat and dairy is growing, especially in emerging markets

The UN estimates that by 2030 the world will need30% more fresh water and 50% more energy; by 2050we will need 70% more food

Our global challenge

Agricultural production willneed to increase substantiallywith limited natural resources

Syngenta at a glance

Sources: USDA; FAPRI; Syngenta analysis


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Contents01 Global challengesGlobal agriculture: growing more from less 6Demand 7

Environmental stress 12

02 Sustainable agriculturalsystemsSustainable intensification of agriculture 21Improving productivity 22Reducing agricultures environmental footprint 26Building rural prosperity 27Investment and subsidy trends 29

03 Crops in focus

Introduction 35Corn 38Cereals 40Soybean 42Rice 44Vegetables 45Diverse field crops 46

Sugar cane 48Specialty crops 49

04 Technology in agriculture

Evolution of the industry 51The role of crop protection 52Crop protection: market overview 53

Crop protection products 54Beyond traditional crop protection 55Crop protection R&D process 57Seeds: market overview 58Plant breeding history 59Benefits of hybridization 60Biotechnology 62

Research, development and regulatoryenvironment for biotech crops 64Innovation and intellectual property 66

05 Lawn and Garden

Market overview 69Flowers, home and garden solutions 69

Professional market and products 69

06 Syngenta key financialinformation and ratiosSyngenta 3-year financial summary 72Regional 3-year financial summary 733-year sales summary 742012 sales by crop 75Balance sheet 76Cash flow 77Significant acquisitions 78Reference sources 79


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01 Global challenges


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millions of people

Asia& Pacific 528

Sub-Saharan Africa 234

Latin America& Caribbean 49

Near East and North Africa 41

Developed countries 16

Undernourished population in 2011

~870million

people

Source: FAO


The ability of our planet to sustain life is fragile and under increasing stress.Despite significant growth in food production over the past 50 years, 870 million

people in the world still suffer from hunger and even more are malnourished.By 2050, the global food requirement will increase significantly, driven by apopulation increase to more than nine billion and a demand for improved diets,particularly in emerging markets.

Agriculture is receiving increasing attention worldwide as government andnon-government authorities recognize a need to accelerate productivity in

order to ensure food security and improved nutrition to a growing population.Farmers will need to produce around 1.4% more grain every year, representingan increase of approximately 30% by 2030 and around 70% by 2050.

At the same time, responding to changes in climate, using the limited naturalresources in a sustainable way and respecting biodiversity pose additionalchallenges to achieving increased farm productivity at the required speed.

Agriculture holds the key role to tackling these challenges and achieving foodsecurity today and in the future. The World Food Summit of 1996 explainedthat food security exists when all people, at all times have access to sufficient,safe, nutritious food to maintain a healthy and active life. But reaching thisgoal will not be easy.

Global agriculture: growing more from less

Our global challenge:increase agriculturalproductivity by at least70% in 40 years withlimited natural resources


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Population

growth

Economic

growth

TotalBiofuels

growth

0.5% ~1.9%

1964 to 1980

1980 to 1997

1997 to 2011Feed ~60%

Food ~30%

Biofuels ~10%

Demand drivers for the next 10 years (to 2025)*

Source: Syngenta analysis


Global challenges 01

Demand

Feed 38%

Food 56%Biofuels 6%

2011 Use of major grains*

Source: USDA


Grain demand is expected to increase ~30% by 2025 an additional 600 milliontons. This demand will not only be driven by population growth but also bygreater economic prosperity in emerging markets, as well as biofuels expansion.Around 30% of this additional demand will come from changes in consumerdiets as opposed to population growth.

Since 1980, demand for field crops has increased almost 90%, from 1.2 billionto almost 2.3 billion tons, with the increased demand for food and feed thekey driver. In addition, biofuels have increasingly played a role to meet our energyneeds in ways that mitigate the growing problem of green house emissions.

Sources: USDA; FAPRI; Syngenta analysis

Sources: USDA; Syngenta

Demand for grain hasincreased almost 90%since 1980 and willcontinue to increase atan average rate of

around 1.4% per year


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Demand

The global population is expected to rise from around seven billion today tomore than nine billion by 2050. Most of this population growth will occur indeveloping countries, where the populations are projected to reach around eightbillion in 2050, an increase of almost 40%. In contrast, the population of the

more developed regions is expected to increase at a much slower rate, toaround 1.3 billion.

Source: FAO, CAGR 20122020

World population isgrowing at a rate ofaround 80 millionadditional people peryear a trend thatis forecast tocontinue until 2020

Today 50% of thepopulation in Chinalive in cities, comparedwith ~17% in 1961

Source: United Nations Department of Economic and Social Affairs

For the first time in history, more people worldwide are living in cities than inthe countryside. By 2050, around three billion more people are expected to beliving in urban areas. In China almost 50% of the population now live in cities.Given that the spend per capita on food is 270% higher than that of their ruralcounterparts, the pressure on achieving food security becomes increasinglychallenging.


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Demand

In parallel, a greater number of people will experience increased wealth andhigher purchasing power, and as a result will increase consumption of processedfood, meat, dairy and fish. A recent Goldman Sachs study estimates that theworlds middle class people earning between US$ 6,000 and US$ 30,000

a year will expand by two billion people by 2030. In China alone, the McKinseyGlobal Institute has forecasted that the middle class will grow to be 76% of thepopulation by 2025. That means not only more people to feed, but also feedingeach person with a higher calorie and protein diet thereby impacting significantlydemand for feed.

Since 2005, global meat demand is expected to increase by 40% by 2025. The

type of meat consumed affects the amount of grain demand: one kilogram ofbeef requires seven kilograms of grain, whereas pork requires four kilograms

and poultry two kilograms.

By 2025 global meatdemand to rise 40%;an increase of around100 million tons

Source: FAO

Source: USDA


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Demand

United States FederalGovernment ethanolmandate: 15 billiongallons by 2015

The US Renewable Fuels Standard; bioethanol production

billions of gallons

1999 2001 2003 2005 2007 2009 2010 2015E

15

10

5

0

Source: Renewable Fuels Association

(1 gallon = 3,8 litres)

Global energy demands are expected to increase by approximately 40% by2030 and energy from biofuels produced from plants is increasingly playing amore important role as an alternative.

Global energy demandsexpected to increase by~40% by 2030

Bioethanol

Biodiesel

2011 biofuel production estimate: 29 billion gallons

billions of gallons

US

EU 27

BrazilRest ofworld

14.0

0.97

1.1 2.7

6.0

0.7~1.8 ~1.7

Source: US Energy Information Administration (EIA)

(1 gallon = 3,8 litres)

The US and Brazil have invested heavily in this area, producing 70% of theworlds biofuels today.

As the US ethanol industry has expanded, the amount of corn used forethanol production has increased. The Energy Policy Act of 2005 establishedthe first-ever Renewable Fuels Standard (RFS) in federal law, requiringincreasing volumes of ethanol and biodiesel to be blended with the UnitedStates fuel supply between 2006 and 2012. The Energy Independence andSecurity Act of 2007 amended and increased the RFS, requiring 13.2 billiongallons of renewable fuel use in 2012, stepping up to 36 billion gallons by

2022. Under the modified RFS, corn-based ethanol is essentially capped at15 billion gallons by 2015, while the balance must be derived from advancedbiofuels such as cellulosic and non-corn-based ethanol.

Biofuels representaround 5% of globalroad transport fuels


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Demand

Since December 2011 the tax credit on ethanol production (45 cents/gallon)as well as US import tariffs on foreign bioethanol (54 cents/gallon) have beendiscontinued, however the US ethanol production and demand have remainedresilient in 2012. While the figures above are correct at time of publication, the

current overall budget discussions in the United States may result in changesto the RFS commitments and requirements.

In Brazil, ethanol from sugar cane produces ~30% of the worlds bioethanoland has replaced ~35% of the gasoline used in light vehicles in the country.Sugar cane ethanol represents a low carbon and cost efficient fuel option incomparison to many other biofuels.

Brazil mandatory biofuelsblend rate planned toreturn to 25% as sugarcane production showssigns of recovery

Over 23 billion liters of

sugar cane ethanolwere produced in Brazilin 2011

CO2output from sugarcane bioethanol is90% lower than oil-basedgasoline

Sugar cane: low carbon and cost-efficient fuel option

CO2balance

%

100

80

40

10 10 10

45

85

110

128

150

180

Crude oil equivalent

US$ per barrel

US$ 100 per barrel

oil price

Oil based gasolineCorn ethanolOilseed rape

Palm

Cellulose

Sugar cane

Brazil sugar caneUS cornMalaysia palm

EU wheat

US soybean

EU oilseed rape

Sources: Farrell et aI, Science January 2006; GTZ; Syngenta

The Brazilian government continues to strongly support the bioethanol industryand plans to return to the mandatory blend of 25% in May 2013 (after twoconsecutive years of poor sugar cane yields the mandate was temporarily

reduced to 20%). Around 50% of the countrys automobile fleet is composedby flex-fuel cars.

The EU Renewable Energy Directive in 2009 established a renewed target ofa minimum of 10% renewables in transport for 2020 and requested nationalaction plans for each member state to outline a path for meeting the target.Most recently, an increasing public debate on competition between food and

fuel, aggravated by high crop prices particularly in 2012, has triggered theEuropean Commission to submit a draft in biofuels policy limiting food-cropbased biofuels to 5% of EU transport fuel consumption. The draft still needsto be approved by the EU governments.

One ton of sugar caneproduces 80 liters ofethanol comparedto 38 liters from one tonof corn


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2011 crop areas

Eastern Europe 13%

Africa 17%

Western Europe, Middle East 6%China 8%

India 11%

Rest of Asia Pacific 20%

United States of America 11%

Rest of North America 6%

Brazil 4%

Rest of LATAM 4%

~1.6 billionhectares


Environmental stress

Limited land for agriculture

Within the 13 billion hectares of total land, only 1.6 billion is under farmland

production; 36% of that land is in Europe, the Middle East and Africa, 39% in

Asia Pacific, 17% in North America and the remaining 8% in Latin America.

2011 crop area:approximately 1.6 billionhectares globally;

12% of land surface

Total planted

area ~1.6 billion ha

Potential area

for agricultural

expansion

Global land use and agricultural land

billion hectares

Land

13.0 4.9 3.3

4.0

4.1

4.9

3.0

0.3

1.2

0.3

Forest Other Agri-cultural

Agri-cultural

Permanentmeadows

Permanentcrops

Majorcrops

Undefined

0.14

Sources: FAO; World Bank; WWF; Syngenta analysis

As demand for increased quantity and quality of crops grows, agriculturemust evolve in order to meet these demands in a sustainable way. Changesin climate will further stress the availability of water, land, and biodiversitynecessary for productive agriculture.

Sources: FAO; Syngenta estimates


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In the 1980s one hectareof arable land produced2.3 tons of grain*annually; today it produces3.4 tons


In the last 50 years, there has been only a gradual expansion in agricultural

areas because yield has increased at a much faster pace as farmers have

adopted more technology, keeping pace with the rising demand for grain.

Source: USDA

Productivity levelsfrom land and water aresteadily increasing,average grain yields perhectare almost doublingin the past 40 years

Until now demand has been met primarily through yield improvement. However,

the improvement rate of yields in the major grains has been slowing down and

will not be sufficient to fulfill increasing demand.

Yield improvementslowing down in majorcrops

Source: USDA


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In 2020 one hectarewill be required to feed

more than five peoplecompared to 1960when it only had to feedtwo people

Source: FAOSTAT

Sources: FAO; WWF; Syngenta

Brazil uses of land

100% Total land area 850

7% Farmed land ~60 25% Cattle raising ~210

49% Amazon & Atlantic forest, rivers 420

9% Cities, roads, infrastructure 75

~10% Potential additional area for cultivation 7085

millions of hectares

To produce the sameamount of food todaywith yield levels from 50years ago would requireadditional land equivalentin size to the US

To meet future global grain demand, the FAO estimates suggest that ~80% of

crop production growth by 2050 is expected to come from higher yields, but

land available for farming will also have to expand by approximately 120 million

hectares in developing countries, mainly Sub-Saharan Africa and Latin America.

These 120 mill ion hectares should come primarily from a change in land use,

for example pastures to arable land which will require significant investment,

knowledge transfer and education. However, the area suitable for agriculture is

only available in limited geographies.

Brazil represents about 60% of this opportunity, with approximately 7085 million

hectares that could be brought into production in the future without impacting

natural ecosystems such as the rainforest.

The challenge going forward is to meet demand without stressing natural

resources.

Agriculture must meetrising demand for food,feed and fuel withoutstressing natural habitats


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Global crop losses due to drought

2012: water stressed year

Key crops affected:corn, soybean,cotton

~US$ 23 billion

US

Australia

CIS

Argentina

(planted 2011)

EU, mainly

central Europe

Key crops affected:corn, soybean

~US$ 4.7 billion

Key crops affected:wheat

~US$ 1.2 billion

Total: ~US$ 40 billion

Key crops affected:wheat, barley, corn

~US$ 6.8 billion

Key crops affected:corn, sunflower,grapes

~US$ 3.5 billion

Source: Syngenta



Every year, some part of the world suffers from drought which can hamper thegrowth of crops and significantly reduce the level of grain harvested. Today,

some 80 countries are already suffering from water shortages, and the problemis not confined to the arid regions of the world. Nations like Brazil, Canada,Colombia, Indonesia, and Russia are all teeming with fresh water but even theysometimes experience severe drought.

Water stress is alreadylimiting productivity:around US$ 40 billionin crop losses in 2012due to drought

Climate variability and agricultural risk


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Source: CBOT/Bloomberg



In 2012 the US drought caused crop losses of almost US$ 23 billion. It haddirect impacts on the commodity market, with significant price spikes of graincommodities.

In addition to the impact of cyclical weather variability, which varies in intensity

and character year by year, some fundamental changes in the climatic patternshave been observed over the last decades. The most visible ones were: 1) globalwidespread temperature increase, 2) change in precipitation patterns (increasedin some regions and decreased in others) and 3) the change of frequency andintensity of some extreme weather events.

Fundamental changes in the patterns of temperature and precipitation could

possibly shift production seasons, pest and disease patterns, and modifythe types of crops grown in certain areas. A potential decrease in productivitydue to hotter and more variable weather may lead to more erratic productionpatterns overall. Although there will be gains in some crops in some regions ofthe world, the overall impact on agriculture may be negative.

Simulations using greenhouse gas emissions models suggest by 2100 an

increase of global average temperature of up to 2.5C, with more and strongerextreme events. These changes are expected to drive a further increase ofwater stress, the acidification of oceans and potentially the risk of extinction of2030% of assessed plant and animal species.

Over the last three yearsunexpected weatherevents triggered lossesof ~130 million tonsand record crop prices

Drought conditionsfrequently observed inregions with no waterscarcity


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Global water scarcity has a critical impact on food security and health.

Only about 3% of the Earths water is fresh, and less than a third of that iseconomically accessible for human use in an environmentally responsibleway making water one of the biggest limiting factors in the worlds abilityto feed a growing population.

Even though global fresh water resources are sufficient, they are unevenlydistributed with water scarcity in some locations already reaching alarming

levels. China and India, with one-third of the worlds people, have betweenthem less than 10% of the worlds fresh water.

Water scarcity China and India togetherhave


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Source: International Water Management Institute

Practically everything we do requires water. With the world population growing,becoming wealthier and more economically productive, the demand for waterwill surge. Along with the economic development over the last 50 years, we haveseen water use triple.

With the competing demands on this finite resource drinking, sanitation,agriculture, energy, and industry it is not surprising that 80 countries sufferfrom water shortages that threaten health and economies, while 40% of theworld more than two billion people does not have access to clean wateror sanitation.

Agriculture is still the largest consumer of fresh water. It is estimated thatalmost 70% of the global fresh water withdrawal is used for agriculturalproduction, not always in the most efficient way.

In Africa many countries use over 50% of their available water resources in

agriculture whereas, in other regions such as Latin America the proportionis significantly lower. Water availability, water quality, climatic conditionsand soil quality as well as local policies, legislation and regulation all play animportant part in ensuring that holistic solutions are developed to meetgrower needs and constraints.

In China around50% of all farmland isirrigated

Over two billion peoplelive in areas that haveno access to clean waterand sanitation


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Use of water to support

agriculture is expectedto grow around 11%globally

Many countries already face temporary or permanent water shortages and,in the future, changes in climatic patterns will likely make these shortages worse.In many developing countries agriculture employs a significant portion of thelabor force and represents a large percentage of total GDP. Therefore, these

people, who are already vulnerable and food insecure, are likely to be the mostseriously affected.

The United Nations Environment Programme estimates that two out of threepeople will live in drought or water-stressed conditions by 2025. In addition tochanges in climate, it is also anticipated that the amount of irrigation waterused in agriculture in developing countries might grow by around 14% while at

the same time it is expected to decline by around 2% in developed countries.This means that on average we will need to use around 11% more waterglobally to support agriculture, much of which might come from the continuedunsustainable use of groundwater, increasing the competition for industrialwater and sanitation.

There is an urgent need to increase water use efficiency in agriculture by

developing new technologies that will help to secure and enhance yields withless water. Global water consumption will continue to increase steadily andwill, without corrective actions, hit global supply thresholds.

Looking forward, solutions need to be found that will not only increase yields butdo so in a way which reduces the amount of water required. The combination ofchanges in grower practices, increased availability of drought tolerant plants,

crop protection and crop enhancement technologies as well as improved growereducation will help deliver tailored solutions that will increase not only output butalso improve overall land stewardship.

Today, one kilogram ofrice requires 3,400 litersof water

On average it takes oneliter of water to produceone calorie of food


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02 Sustainableagricultural systems


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Sustainable intensification of agriculture

Agricultural technologies enable a sustainable production system that protectsthe long-term economic and environmental viability of farming. Farmers canearn better incomes, live better lives and become stewards of the land.

Strong rural economies are the keystone of sustainable agricultural systemsand fundamental in achieving food security. Technology combined with

supporting infrastructure, access to markets and financial resources enablebetter solutions for farmers so they can increase productivity and improvethe farm economy. At the same time, agricultural solutions can have abeneficial impact on water, land and biodiversity by allowing more efficient andresponsible use of these basic natural resources. Creative financial solutionsare necessary for sustainable increases in productivity. Bad weather andsub-optimal harvests, for instance, can result in a cycle of poor productivity

and low incomes, which can be hard to break. The International Fund forAgriculture Development (IFAD) has shown that GDP growth generated byagriculture is up to four times more effective in benefiting the poor comparedto growth generated by other sectors. The importance of focusing onagriculture is highlighted by China and India where, in 2011, the sectoraccounted for more than 30% of their GDP.

The dilemma facing the world today is how to feed a growing populationwhile safeguarding the only planet we have. Although this poses significantchallenges, they are by no means unachievable.

A system-wide approach to sustainable agriculture which focuses on thelinks between technology, people and land can contribute to solving thesechallenges.

GDP growth generatedby agriculture is up to

four times more effectivein benefitting the poor

Sustainable agricultural systems 02


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The Green Revolution that began in 1945 transformed agriculture through theintroduction and expansion of technology in certain parts of the world. Farmproductivity benefitted greatly as the Green Revolution focused on developingimproved crop varieties, together with crop protection products, irrigation

projects, and synthetic nitrogen fertilizer to successfully alleviate hunger inmany areas.

Yields grew dramatically in many regions while limiting the expansion ofcultivated land. Global production of the major crops corn, soybean, wheatand rice have more than tripled since 1960. During that time, yields for ricehave more than doubled and those of wheat have increased by around 160%.

Improving productivity

Over the past 20 years aton of corn can be grownusing 37% less land

Global production ofcorn, soybean, wheatand rice more than tripledsince 1960

0

1

2

3

4

5

6

7

1985 1990 1995 2000 2005 2010

Developed countries

East Asia&Pacific

Latin America&Caribbean

South Asia

Sub-Saharan Africa

Cereal* yields

tons per hectare (t/ha)

* Barley, buckwheat, canary seed, fonio, corn, millet, mixed grain, oats, quinoa, rice, rye,

sorghum, triticale, wheat and other cereals

Source: FAO

02 Sustainable agricultural systems


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However, the revolution was never fully realized with many places in the worldby-passed, especially Africa. This is reflected, for example, in the loss ofinternational competitiveness of many traditional African export crops during thepast 30 years. At the same time, many domestic crops have become less

competitive and import dependence has increased. For the foreseeable future,reducing poverty in Africa will largely depend on stimulating agricultural growth.

Agricultural productivityis a key driver to reducepoverty

Cereal yields

(t/ha)

Poverty incidence

%

3.5

2.5

1.5

0.5

3.5

2.5

1.5

0.5

60

50

40

30

20

10

0

60

50

40

30

20

10

0

Cereal yields

(t/ha)

Sub-Saharan Africa South Asia

Poverty incidence

%

1987 1990 1993 1996 1999 2002 1987 1990 1993 1996 1999 2002

Poverty

Yields

Clearly, the worlds farmers need to increase yields per hectare sharply andsustainably. This means without using more water or other natural resources,while using chemical inputs like fertilizers and pesticides as efficiently aspossible.

Note: Cereals includes corn, wheat, rice, barley, rye and sorghum

Sources: Ravallion and Chen 2004; World Bank 2006



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Estimated range of avoidable losses and waste by stage globally

* Up to 100% possible if all technologies are implemented together, based on selected crop and country combinations

** Represents average range; certain crop and location combinations may see up to 50% post-harvest loss

An estimated 3050% of food is lost or wasted in the chain

(around 1.3 billion tons annually)

Potentialproduction

110140% 1040%*

210 %

100% 530%**

15%

~3050%

15 %1030%

5070%

Yield gap Harvest loss Production Post-harvestloss

Processingloss

Distributionwaste

Consumerwaste

Consumed



Crop losses in fields can be addressed by applying better products and usingmore effective practices, so that the yield gap is closed and valuable productionis not lost during the harvest process. In Africa, insects and weeds destroy anestimated 25% of the crop. Post-harvest losses can be addressed with in-farmand out-farm solutions.

By focusing on post-harvest crop protection products and increasing theefficacy of the supply chain, we can help combat some of the issues relatedto storage, transportation and processing losses.

In the area of smallholder farming, this is particularly important given thenumber of smallholders who live on the edge of food security. If we are able

to successfully address some of these challenges, we can have a significantimpact on the livelihoods of many people.

Insects and weedsdestroy ~25% of cropsin Africa

Sources: FAO; Syngenta

However, there is also a need to reduce inefficiencies that occur in the currentproduction system. Around 40% of all food produced is never used. Much of itis wasted during the post-harvest process which is effectively a waste of theresources invested in the crop: the land, water, and nutrients needed to grow

the crop. Another significant portion is thrown away by consumers and retailers.

In developing countries40% of grain lossesoccur post-harvest


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Without the intensificationof agriculture, 50100%more land would need tobe cultivated comparedto 1960

Many regions of the world hold the potential to increase productivity significantlyin the coming years by adopting modern technologies. For example, in Russiaand the Ukraine, once considered the breadbasket of Europe, only 10% of theland surface is farmed efficiently. Asia has the potential to boost productivity by

approximately 20% in 10 years by adopting current technology. BRIC countries(Brazil, Russia, India and China) are expected to undergo the greatest growthbetween 2010 and 2021, with the OECD foreseeing around 30% of globalproduction growth and continuing professionalization of those markets, with theongoing adoption of technology.

A recent study from Stanford University found that without the intensification

of agriculture, 50100% more land would need to be cultivated comparedto 1960. At the same time, there are those who call for extensification, suchas increased organic production. Organic production methods can fit intointegrated farming systems when the products and methods used are safe,effective and economical. Currently organic farming occupies less than 1% oftotal land used for food production, with average yields approximately 35%lower than those from conventional agriculture. This level of output is not

sustainable or sufficient to feed a growing global population.

Sources: OECD; FAO


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Improved farming practices and solutions will not only address the needfor increased productivity but also help farmers manage and protect theenvironment. Many stakeholders from a wide range of disciplines, includingacademia, governmental and non-governmental settings, are acknowledging

that agricultural intensification is necessary to produce enough foodwithout further compromising nature.

Greenhouse gas emissions directly associated with crop farming and livestock(excluding deforestation) represent around 14% of all man-made emissionsand have been continuously decreasing per ton of crop produced due to theintensification and modernization of practices and products.

In addition, agricultural productivity has been contributing to more optimizedland use and consequently the conservation of natural habitats. The mostconcerning land use change in modern times has been deforestation, which isalso the second major contributor for man-made greenhouse gas emissions.In Brazil, for instance, Amazon deforestation plunged to a historic low in 2010,more than 75% below its 2004 peak, while productivity increased faster than

most countries across the globe.

Fertile soil is the foundation of sustainable agricultural systems; biodiversityis the basis for agricultural resilience. But poor farming practices leave soilsdepleted and exposed to soil erosion. Already, some 40% of the worldsfarmland is seriously degraded. Cultivating more wilderness for humanconsumption threatens biodiversity, so it is crucial that farmers become more

productive and manage their land to protect and improve biodiversity onfarm and around the field.

Millions of hectares of farm land become infertile globally each year asa result of soil erosion. Much of this soil is lost as a result of traditional tillageused for weed control. By breaking up and turning the soil, tillage leaves itmore vulnerable to erosion and soil is more easily washed off the fields by

heavy rain. Globally around 15% of the population has become affectedby land degradation since 1981.

Farmers need help to increase soil fertility and improve the productivity ontheir land in sustainable ways. That means crop rotations, restoring degradedland, planting vegetation around fields to prevent erosion and techniques toavoid unnecessary tilling. It takes nature 500 years to replace 25 mm of lost

soil making soil a top priority for every farmer.

Farming also depends on biodiversity. Diversity of genetic material is thekey to adapting crops to changing conditions and changes in climate areaccelerating the need for adaptation. Farmers need the pollination providedby bees and other insects a number of the worlds agricultural cropsdepend on pollination.

See how Syngentas operation pollinator helps with biodiversity on:www.syngenta.com

Soil loss in corncultivation has dropped69% per ton in thepast 20 years

Agriculture accountsfor 14% of all man-made greenhouse gasemissions and70% of the worldsfresh water use

Nature takes 500 years

to replace 25 mm oflost soil

Reducing agricultures environmental

footprint



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Building rural prosperity

The worlds 450 million smallholder farmers, farming less than two hectaresof land, are globally the largest farmer group and of key importance to local,national and global food security, especially in developing countries.

In Asia and Sub-Saharan Africa, more than 80% of farmers are smallholders.They farm less than 50% of the agricultural land and produce 35% of globalgrain (corn, soybean, wheat and rice) output. However, the regions wheresmallholder farmers make up the majority of the farming communities are alsothe regions that are most food insecure, where the largest agricultural yieldgaps exist and where overall country development is blocked by undevelopedrural systems. In fact, smallholders constitute half the hungry people in the

world today. By 2050, smallholder farms will need to more than double theircurrent production. It is clear that we will need to focus on smallholder farmersto ensure rural prosperity.

Smallholder farmers often lack access to appropriate technology, educationand agronomy training, information on weather, pests, diseases, markets andfinancial resources and this hinders productivity increases. It also curtailsthe ability of farmers to be profitable and to support the development of theirfamilies and communities.

Around 35% of the farmers in low- and middle-income countries have accessto adequate resources and markets. Appropriate technology, coupled withagronomic knowledge and best practice, can help these farms increaseproductivity in an environmentally sustainable manner. For example, labor costsfor weeding have been found to absorb up to 50% of a smallholders productioncosts and this will increase as labor availability for agriculture decreases in many

countries. Access to the right technology, such as herbicides, can significantlyreduce labor costs as well as bring environmental and yield benefits.

Smallholder farmers inChina, India and Sub-Saharan Africa accountfor around 35% ofglobal grain* production


Source: FAO agricultural world census

An estimated 2.5 billionpeople in the developingworld depend onagriculture for their

livelihoods



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When smallholder farmers are given access to improved agriculturaltechnology, new crop varieties and better irrigation methods, they can beefficient producers per hectare and achieve high levels of yield. Vietnam,for instance, transitioned from being a food deficit country to being the second

largest rice exporter in the world largely through developing its smallholderfarming sector. It is estimated by the FAO that around US$ 30 billion per yearneeds to be invested in re-invigorating smallholder agriculture on a globalscale, in order to reverse the decades of under investment.

But simply increasing productivity is not enough. Farming needs to beprofitable. For this farmers need access to markets and fair prices for their

produce. Developing farmer cooperatives, partnering with food chain companiesand accessing market and price information via mobile phones are someways in which farmers can access markets and secure better prices for theirproduce. The risk of farming can also be reduced through provision ofaffordable credit and insurance.

The role of women farmers is another aspect that demands focus, as well.

In the smallholder regions of Asia and Africa women make up 6075% of theagricultural workforce. Yet they often have no claim to their land and find itharder than the men to access markets, financial services and technology. Toincrease the productivity of smallholder farms and the food security of ruralcommunities, women farmers need to be especially targeted when developingagricultural solutions.

Source: Syngenta

Building rural prosperity

There is a growing recognit ion of the importance of smallholder farmers.And many stakeholders including governments, donor agencies, the privatesector and non-profit organizations are working independently and inpublic-private partnerships to develop innovative solutions including investmentsin infrastructure and training, financial solutions, mobile phone-based solutionsand contract farming.



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Investment and subsidy trends

Given increasing pressure and global focus on achieving food security, therehave been significant positive trends in recent years related to investmentin agriculture. The necessary productivity increase can only be achieved if itis underpinned by adequate levels of both public and private investments.

Higher levels of agricultural investments translate directly to an increase inproductivity. These investments can take a number of forms, including: Government agricultural subsidies and support Public-private partnerships Private investments

The FAO estimates that to meet the food requirements in 2050, US$ 120 billion

needs to be invested in the agriculture sector annually in Asia Pacific. Thepresent level of investment, both from public and private sector, is estimatedat US$ 80 billion.

Government subsidies: US Farm Bill

The US governments commitment to strong federal farm policies ranges fromdomestic support to taxes, trade, conservation, research and energy. Themajority of these policies are contained within the 2008 US Farm Bill and untilrecently have experienced strong backing, particularly from the US Senate.High crop prices and hence increased farmer incomes as well as requirementsto cut national deficits are putting increasing pressure on the current levelsof funding, and it is likely that significant changes will be seen following expiry

of the Farm Bill at the end of 2012.

Currently around 27% of the mandatory dollars committed under the 2008Farm Bill provide domestic support for farmers and ranchers, including theprovisions for crop insurance and conservation payments. The remaining73% of the Farm Bill expenditures cover nutrition programs, such as theNational School Lunch Program and the Supplemental Nutrition Assistance

Program (food stamps), further ensuring the governments commitment toa stable domestic food supply.

Currently US farmers receive support through a variety of federal programs:

Commodity programs providing price and income support, intended

to help farmers stabilize their incomes

Farmer loans and crop insurance at favorable rates Conservation payments, disaster assistance and incentivesto produce renewable energy

Nutritional programfunding accounted for73% of the spendingunder the US Farm Bill

in 2008



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United Statesagricultural producersreceived US$ 12.2 billionthrough commodityprograms in 2009

Source: Syngenta estimates

The new Farm Bill and its more revenue-based policy frameworks should beimplemented in Q3 or Q4 of 2013, well before the 2014 growing season.

Government subsidies:EU Common Agricultural Policy (CAP)

For over 50 years, the Common Agricultural Policy has been a cornerstone ofEuropean Union policies. Europe is a large global importer/exporter of the majorfood and feed crops. Over time, the CAP has evolved, ensuring: A stable supply of affordable and safe food exists for the European population

Agricultural production remains environmentally friendly The security of the economic and social foundation of rural communities in allparts of Europe while minimizing distortion of international trade

2011 EU budget foragriculture: 54.7 billion


Initial indications suggest that the total 2012 Farm Bill may be reduced byUS$ 23 billion with around 80% of the cuts coming from agricultural supportand the remaining 20% from nutritional programs. In addition, it is expectedthere will be a shift from subsidized production payments towards revenue

protection and enhanced crop insurance tools. The rationale for reducingdirect payments is based on federal deficit reduction efforts and a diminishedneed for a farm safety net due to sustained high crop prices.



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Source: European Commission, DG Agriculture and Rural Development


All of these programs seek to provide a market-oriented safety net, allowing

for the wide diversity of farmers in Europe to develop over time and managethrough difficult years.

In October 2011, the European Commission unveiled planned reforms to theCAP which will take effect during the period 20142020. The proposed revisionaims to ensure viable food production, sustainable management of naturalresources and balanced territorial development across the region while at the

same time promoting resource efficiency that will ensure smart, sustainableand inclusive growth for EU agriculture.

In the 27 EU countries, approximately 16 million farmers managing 178 millionhectares are potentially benefiting from the CAP. In 2010, the total CAPexpenditure was just under 55 billion, equivalent to roughly 0.4% of EU GDP,allocated as follows:



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It is expected that the CAP will continue to follow a two-pillar approach basedupon:

Annual direct payments and market measures

Multi-year rural development measures

There will be a third area of additional spending allocated to research andinnovation in agriculture and bio-economy.

In the proposals the first pillar payments consist of three elements: basicpayments, greening measures and specific additional support schemes. Basicpayments will only be made when minimum standards of cross compliance

and good agricultural and environmental conditions are met, including waterand sustainability measures. To qualify for greening measure payments, farmersmust demonstrate crop diversification, maintenance of permanent grasslandsand the establishment of ecological focus areas such as field margins. The finalelement, specific support schemes, encourages young farmer developmentas well as development of farming in areas with natural constraints.

20142020 CAP approvaldue spring 2013

The second pillar related to rural development measures aims to complementthe first pillar by encouraging farmers to pursue voluntary practices that gobeyond the mandatory standards and requirements. The proposed measuresfocus on food chain organization, disease/pest risk management, knowledgetransfer, competitiveness and agri-environmental schemes that preserve and

promote resource efficiency.

The European Commission proposals anticipate that the future level ofexpenditure of the CAP will remain frozen at current levels throughout theperiod 20142020 and the total budget for the CAP should be around 382.9 billion.

However, this is now subject to the joint approval of the Council of MemberStates and the European Parliament, with a decision expected in spring 2013.It is quite likely that the final outcome will see further changes to the waypayments are distributed between and within the two pillars, and that theoverall EU budget for agriculture will be reduced by at least 2%.

Source: Syngenta




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Investments focusingon economic, social andenvironmental returnswill create the mostsustainable long-termvalue

Working in partnership is key to enable and accelerate the development offunctioning markets. The combination of public and private expertise allows

traditional public sector skills of rural development, long-term research andpolicy to be combined with the more practical elements of companies andbusiness such as technical and market development as well as marketing anddistribution expertise. Public-private partnerships are most successful whenclearly defined agreements exist regarding contribution to the collaborationand share of the output. Common goals, objectives and deliverables must be

underpinned by a commitment from all parties, open communication, trustand an agreed balance of power sharing.

The benefits to be gained include wider access to technology, improvedconnectivity between growers and markets, ability to build on individualexpertise, ability to share costs and optimize investment decisions as well asoverall increased chance of success in R&D related projects.

Critical agricultural challenges such as water efficiency, infrastructure andpost-harvest loss management can be better addressed when joining up theright partners, including those who provide financing, technology, machinery,irrigation, farming expertise and infrastructure. Through long-term investmentand commitments, the benefits can be substantial in enabling many countriesnot only to produce enough food to replace current imports, but also to becomeresource efficient and competitive in global markets.

A good example is Africa where agriculture is likely to continue growing butat different paces depending on the country. Governments are directing moreinvestments to agriculture, especially in the productivity of smallholder farming,a sector that suffers from the difficulty of accessing markets and technology.The large opportunity for public-private or private-private partnerships is todevelop innovative new business models that will remove existing constraints

and attract investors. Joint efforts in knowledge sharing through agronomytraining, including the best use of crop protection and seed programs, and inbetter farm management practices pay out in better productivity and profitabilityof agriculture.

Private investmentaccounts for 50% ofR&D spend in developedcountries; in emergingmarkets it is only 6%


Public-private partnerships



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03 Crops in focus


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Regional agriculture patterns

China: large-scale production

model, major soybean

importers

Asia: largest vegetable and rice

producer

EU 27: net importers

CIS: increasing export share,

largest oilseeds producers

Production gap,

unmet demand

Major soybean andmeat exporters,

largest sugar cane

producer

Major grain

and meat exporters

Source: Syngenta

Crops in focus 03

Introduction

There are eight major crops/crop groupings grown globally: corn, cereals,soybean, vegetables, rice, diverse field crops, sugar cane and a number ofsmaller more diverse crops referred to as specialty crops. These cropsrepresent the majority of global food production and planted area worldwide.

Currently we consume 2.3 billion tons of grain per year for food, feed and fuelwith four crops corn and soybean (primarily for feed), and wheat and rice(primarily for food). Most grain is locally produced and consumed. Only a fewcountries, such as the United States, Brazil and Argentina, have sufficientindustrial-scale grain production to contribute significantly to global trade.

Wheat, corn, soybeanand rice account forapproximately 90% ofglobal grain consumption


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Sources: USDA; ISAAA

03 Crops in focus

Introduction

Around 22% of wheat and 38% of soybean are traded globally. Only 12% ofcorn, 8% of rice, 5% of sunflower and less than 3% of vegetables are tradedglobally, with the rest being consumed locally. In sugar cane the level of exportof raw cane is minimal but the exports of processed sugar account for 33%

of total production.

More than 80% of graintoday is locally producedand consumed


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Crops in focus 03

Introduction

Sources: Phillips McDougall; Syngenta

Source: Syngenta


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03 Crops in focus

Corn

Corn (also known as maize) is widely cultivated throughout the world, resultingin more tons produced each year than any other grain. Feed use has fallen from

70% to ~60% over the last decade, mostly due to growth in biofuels. Given

that ~60% of corn is still used for animal feed, a key driver of future growth will

be meat consumption and demand. The underlying feed demand for corn will

continue to grow as protein consumption grows in emerging markets. As far as

non-food and feed uses are concerned, the main factor will continue to be US

demand for ethanol. Currently around 40% of US corn production is used for

ethanol. Another important outlet for corn products after feed and fuel is industrial

use, in particular starch and sweeteners.

Prices: last update January 2013

Sources: WASDE; Bloomberg; Syngenta analysis

It takes ~950 liters

of water to growone kilogram of corn

Corn production islargely driven by animalfeed requirements,which account for 60%of demand

One planted seeddelivers over 500 kernelsof corn


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314

279

193 188

65 6773

54

218

1829.5 22 17

2011 corn production and consumption

millions of tons (Mt)

350

300

250

200

150

100

50

0

US China EU Brazil Argentina Mexico India

Production Consumption

Production

Total: 878 Mt

Top 7: 80 %

Consumption

Total: 873 Mt

Top 7: 74 %

Trade

Total: 108 Mt

12% of production

US corn yields

bushels per acre

19301920 1940 1950 1960 1970 1980 1990 2000 2010

Marker-assistedbreeding

Seed treatments

Traits

Double cross

hybrid

Revolution #2

Biotech-led step change

Revolution #1

Introduction of corn hybridization

improved agricultural productivity

200

150

100

50

0

Single cross

hybrid

Crops in focus 03

Corn

Corn is the most widely grown crop in the Americas, specifically the UnitedStates which produces around 36% of the worlds harvest. Other top producingcountries include China, Brazil and the European Union. The key exporters arethe US and Argentina. In 2011, Brazil was a major exporter due to production

shortages in US and Argentina.

Historic yield growth for corn has been driven by a succession of technologicalinnovations and intensification. The continuing advances in genetic modification

(GM) and marker-assisted breeding are expected to accelerate this growth tomeet future increases in demand. 88% of the corn grown in the United States in2011 was genetically modified. In 2011, GM corn was also grown in Argentina,Brazil, South Africa, Canada, Philippines and six EU countries. Asian countriesare increasingly positioning themselves towards GM and this may indicate apotential acceleration of the technology in the region.

Sources: USDA NASS; Syngenta

The United Statesproduces ~36% of theworlds corn andis the largest exporter

88% of the corn grown

in the United States todayis genetically modified

World

United States

China

France

Brazil

Argentina

Russia

South Africa

Nigeria

2011 corn yields by countrytons per hectare (t/ha)

0 2 4 6 8 10

Sources: USDA; COCERAL


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03 Crops in focus

Cereals

Wheat is the principal cereal cultivated worldwide accounting for about 68% of

global cereals production. In 2011, world production of wheat was 696 million

tons, making it the second most produced grain after corn. With around 80% of

the crop being used for food, wheat consumption is driven primarily by population

growth. Feed use at ~20% is the next largest outlet, and this has been growing

recently as wheat has been competitive with alternative crops such as corn and

sorghum. A new and additional use is biofuels which, while growing, still represents

only a minor portion of consumption.

Wheat is grown on more hectares worldwide than any other crop and likewiseis distributed over a wider range of countries, China being the major individualproducer. The major exporters are the CIS, United States, Canada and the

European Union. Currently, there is no genetic modification in wheat due tostrong public opposition. Recently, however, Canadian, US and Australian wheatindustry groups have voiced their support of GM technology.


Sources: WASDE; Bloomberg; Syngenta analysis

80% of wheat productionis used for food

Wheat is grown in over120 countries worldwideon ~230 million hectares,producing around~700 million tons of grain

There is no GM trait inwheat today


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6 7

2011 wheat production and consumption


EU

China

India

US

Russia

Pakistan

Canada

Kazakhstan

Argentina

Ukraine

Australia


137

127118

8781

54

32

56

38

24 23 25

10

23

816

3022

15

121

Production

Total: 696 Mt

Top 11: 85 %

Consumption

Total: 695 Mt

Top 11: 67 %

Trade

Total: 157 Mt

22% of production

160

140

120

100

80

60

40

20

0

Wheat is the most susceptible of all major crops to the effects of changingclimatic conditions, pests and diseases. With tight supply and demand balance,high usage of low yielding saved seeds and no GM currently available, significanttechnology investment is required to match yield growth with demand growth.

Planted on ~50 million hectares in 2011, barley is the second largest cereal crop

worldwide. The top five producing regions are EU, Russia, Ukraine, Australiaand Canada and combined these account for approximately 70% of globalproduction. The primary use of barley is animal feed as a good source of protein.Similar to wheat, there are no GM traits in barley today and a relatively high useof saved seeds leading to significant discrepancies in yield performance globally.

Crops in focus 03

Cereals

World

France

Germany

China

India

United States

Russia

Canada

Argentina

2011 wheat yields by country

tons per hectare (t/ha) 0 2 4 6 8 10

Around 10% of barleyproduced worldwide isused for beer production



2011 barley production and consumption


60

50

40

30

20

10

0


Production

Total: 134 Mt

Top 5: 70 %

Consumption

Total: 136 Mt

Top 5: 60 %

Trade

Total: 20 Mt

15% of production

EU Russia Ukraine Australia Canada

5152

1714

96

8

3

8 7

2011 barley yields by country


World

Canada

Australia

Ukraine

Russia

EU

0 2 4 6


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Soybeans can producetwice as much protein

per hectare as anyother crop

03 Crops in focus

Soybean

Soybean is an important global crop, providing protein and oil; ~80% of thesoybean crop is used as meal for animal feed, with the remainder used eitherdirectly for food or in a wide range of industrial products.

Population growth and increasing meat consumption per capita will continueto drive demand for soybean production in the future. China is expected tocontinue to increase its imports in the medium term, and Latin America isexpected to be the main supplier of this growth. The US is expected to remaina strong exporter.


Sources: WASDE; Bloomberg; Syngenta analysis Source: USDA

~80% of the soybeancrop is used for animalfeed


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84

49

67

40 4137

14

71

2011 soybean production and consumption


100

90

80

70

60

50

40

30

20

10

0

US Brazil Argentina China


Production

Total: 238 Mt

Top 4: 86 %

Consumption

Total: 254 Mt

Top 4: 77 %

Trade

Total: 90 Mt

38% of production

Crops in focus 03

Soybean

Source: USDA

The United States, Brazil and Argentina together account for more than 80% ofglobal soybean production, while China and the European Union are the majorimport markets for soybeans.

Soybeans are one of the food and feed crops that have been geneticallymodified, and GM soybeans are being used in an increasing number ofproducts. In 1997, 8% of all soybeans cultivated for the commercial market

in the United States were genetically modified, and by 2011 that number hadgrown to ~94%. Globally, 75% of the soybeans planted today are geneticallymodified.

More than 80% ofsoybeans are producedin the Americas

~75% of soybeansgrown globally today aregenetically modified

World

United States

Brazil

Argentina

China

Canada

India

2011 soybean yields by country


0 2 4 6


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141140

37 40

104

93

11 11 13

6 3

34 3527

20 20

10 10

2011 rice production and consumption


140

120

100

80

60

40

20

0


China India Indonesia Bangla-desh

Vietnam Thailand Myanmar Philip-pines

US

Production

Total: 465 Mt

APAC: 90 %

Consumption

Total: 458 Mt

APAC: 86 %

Trade

Total: 38 Mt

8% of production

World

China

India

Indonesia

Bangladesh

Vietnam

Thailand

PhilippinesUnited States

03 Crops in focus

Rice

Rice is the most important staple food for a large part of the worlds humanpopulation. The growth in demand for rice is correlated to population growth andis expected to be around 1% per annum.

There are three main challenges surrounding the largest global food crop. Thefirst is to accelerate the yield productivity growth trend, highlighted by the biggestproducing regions, South and South East Asia, delivering inconsistent yields at60% below their estimated potential. Secondly, the current growing methods have

a substantial reliance on labor that must be reduced. More than 90% of rice isplanted by hand and with labor availability increasingly scarce, labor costs continueto escalate. Finally, excessive loses during and after harvest can reach up to 40%.To solve these challenges a more comprehensive approach to rice planting isrequired, with substantial up-scaling of agricultural input quality and intensification,complemented by agronomic education and infrastructure improvement.


Sources: WASDE; Bloomberg; Syngenta analysis Almost 90% of rice is

grown and consumedin Asia

Source: USDA

2011 rice yields by country


More than one billionpeople depend onrice cultivation for theirlivelihood

Annual per capita riceconsumption in Asiais 85 kg, seven times thatof the United States

0 2 4 6


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Crops in focus 03

The input value (crop protection, seeds, fertilizer) to the crop represents around3% of the ~US$ 600 billion production value, of which around US$ 4 billionrelates to seeds.

Source: FAO

Vegetables

Around 75% of the 1 billion tons of global vegetable production takes placein Asia and over 60% of global production is consumed by 3 countries: China,India and the United States.

The vegetables market is divided into 6main crop groupings and 18 major crops:

Solanaceae Tomato, pepper, eggplant

Cucurbit Melon, watermelon,

cucumber, squash

Root & bulb Onion, carrot

Brassica Cabbage, cauliflower, broccoli

Leafy Lettuce, spinach

Large seedvegetables

Beans, peas, sweet corn

Input value ~US$16billion, production value~US$ 600 billion

The cost of seeds forsome high value tomatovarieties can be morethan double the cost ofthe equivalent weightin gold

Key demand drivers for vegetables are population growth, GDP evolution,evolving customer preference for fresh produce and a willingness in developedmarkets to pay a premium for different appearance, taste or color. Given thesedrivers, the largest future growth market is expected to be Asia.

There is a significant difference both in tastes and production methods in the

emerging and developed markets. Emerging markets tend to be dominated bysmall growers focusing on individual products and supplying small, local marketplaces. On the opposite side are the developed markets where vegetablesproduction is well established and reliable suppliers and growers are essential,as are efficient supply chains. Consumer and retailer needs play an importantpart in shaping the product offerings in the developed markets.

Understanding customer needs is critical, and the value chain and customerrequirements are complex. Customers from a growers perspective includetraders, retailers and end consumers, each having their own requirements allof which ultimately must be delivered by the grower.



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03 Crops in focus

Sunflower is widely grown in the emerging markets of Russia, Ukraine and

Argentina where it is an important crop due to its stable growing patternseven under adverse climatic conditions. In addition low input costs and highcommodity prices make it particularly attractive in these markets. With adrive towards higher yielding varieties and native trait adoption, the markethas seen a substantial shift from local genetics to high value hybrids. Thismarket evolution is expected to continue, and will be an important driver inmeeting the 5% per annum demand increase.

Demand for vegetableoils has increasedat 5% per annum since2000

Russia and Ukraineaccount for almost33% of global sunflowerproduction; Ukraine isthe biggest sunflower oilexporter

Global vegetable oil production

millions of tons 20002025 (Mt)

2000 2005 2010 2015E 2020E 2025E0

50

100

150

200

250

Demand 2011

Soybean oil

Rapeseed oilSunflower oil

Palm oil

Palm kernale oilCottonseed oil

Groundnut oil

Coconut oilCorn oil

Diverse field crops

9.5

3

2 2

3

10

2011 sunflower production and consumption


11

10

9

8

7

6

5

4

3

2

1

0

EUUkraineRussia Argentina China USTurkey


Production

Total: 39 Mt

Top 4: 79 %

Consumption

Total: 39 Mt

Top 4: 76 %

Trade

Total: 2 Mt

5% of production

8 8

10

9

1 11

2

World

EU

Ukraine

Russia

Argentina

China

United States Turkey

2011 sunflower yields by country


0 0.5 1.0 1.5 2.0 2.5


Source: LMC

Diverse field crops group includes sunflower, oilseed rape (canola) andsugar beet. Sunflower and oilseed rape both produce high value vegetableoils, characterized by their healthy composition with a larger proportion ofunsaturated fats which are critical to todays diets. As such they are the most

valuable vegetable oils and particularly targeted for food uses. With demandfor vegetable oils increasing at around 5% per annum, they play an extremelyimportant role in meeting future demand.


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Crops in focus 03

United States sugar beethad already reached 95%GM adoption in 2009;its third year ofcommercialization

Around 60% of Canadasrapeseed is exported

Oilseed rape and sunflower are frequently grown in crop rotation with otherfield crops such as wheat or corn and farmed in an environmentally sustainableway. Both crops are highly adapted to their respective environments, providegood returns to growers and positively contribute to environmentally sustainablefarming.

Sugar beet is responsible for around 20% of the global sugar productionworldwide. Sugar beet is a root crop which grows in temperate zones with avery intense and demanding cultivation. It is therefore mainly concentratedin the Northern Hemisphere, where it is an important rotational crop, specificallyin Europe. France is the biggest worldwide producer of sugar beet followed byUS, Germany, Russia and Turkey. France is also the biggest European producer

of sugar.Sugar beet growers have quickly adopted GM technology. The glyphosatetolerant trait, launched in 2007, covers today 95% of the area planted in theUS, having already reached 60% adoption in the second year of launch.

Diverse field crops

World

EU

China

Canada

India

Australia

Ukraine

United States

2011 winter oilseed rape yields by country


0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

19

13 14.5

7 76.5

31 1.5 1

0.21

16.5

22.5

7

2011 winter oilseed rape production and consumption


25

20

15

10

5

0

EU China Canada India Australia Ukraine US


Production

Total: 61 Mt

Top 4: 88 %

Consumption

Total: 63 Mt

Top 4: 84%

Trade

Total: 13 Mt

21% of production

Oilseed rape dominates the productive farm lands of the northern countriessuch as Canada, Germany, France and UK where it is grown by sophisticatedfarmers. China is also an important oilseed rape growing country with productionrepresenting over 20% of the worlds harvest, all of which is consumed locally.



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Source: FAPRI

Source: USDA Note: Assumes that 50% of sugar cane area is dedicated to biofuels

Source: OECD-FAO

Sugar cane demand is growing exponentially driven by both human sugardemand and biofuels. This outpacing of demand has pushed prices up almost250% over the last 20 years. With sugar cane producing over 80% of theworlds sugar, this creates a significant requirement to improve yields andefficiency. Due to lack of technification, growing areas have expanded to keep

pace with demand but this is not a sustainable model. Technology developmentwill be essential to increase yield over the life of the crop and to address landsustainability issues. Currently there is no GM available in sugar cane dueto lack of investment and the genetic complexity of the crop. Significant strideshave been made in this area in recent years which should allow developmentof GM sugar cane crops in the foreseeable future.

Brazil

India

China

Thailand

Mexico

United States

World

2011 sugar cane yields by country


60 65 70 75 8580

Sugar cane is a highly productive perennial grass which is grown largely intropical and subtropical regions with no water scarcity. Sugar cane requiresaround 250,000 m3of water per hectare. Ideal growing conditions are hot duringthe initial growth phase and then dry during the maturation stage this willoptimize the level of sucrose production.

Sugar cane is only replanted every five to six years. During that period thecrop is harvested and regrown several times and, as a consequence, crop yieldprogressively diminishes; with as much as 50% loss in sugar content.

Sugar cane production is largely concentrated in six countries. Brazil is the

worlds largest sugar cane producer, producing over 40% of the worlds sugarcane. Over the past 10 years production has increased by over 100% andupward trends are continuing at a comparable pace. Bioethanol derived fromBrazil sugar cane is very cost competitive relative to other sources even withno governmental subsidies. Sugar cane derived biofuels (ethanol, bioelectricity)rank highly with regard to sustainability with up to a 90% reduction ingreenhouse gas emissions compared to gasoline.

Brazil producesover 40% of the worldssugar cane

Around 50% of Brazilsugar cane outputis used for biofuelproduction

03 Crops in focus

Sugar cane

Sugar cane produces~80% of the worldssugar


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Specialty crops

Crops in focus 03

Specialty crops represent a collection of more than 40 diverse crops spanningthe major fruit crops, potatoes and cotton, as well as the plantation cropssuch as coffee and cocoa. Specialty crops are grown throughout the year in allregions and have a total farmgate value in excess of US$ 500 billion. There

are significant yield differences in many of these crops, depending on whereand how they are grown, agronomic practices and degree of technification.

All regions have a diverse range of specialty crops specific to the agronomicconditions within that region:

Specialty crops encompass a multitude of end uses, from high value nichesegment consumables such as chocolate and wine, through to broader

segment end uses including textiles, tires and cooking oil.

The key food crops within specialty crops have many similar characteristicsto vegetables in terms of demand drivers and grower challenges. Likevegetables, a significant proportion of the market exists in Asia Pacific andas such many crops will experience above-average demand growth linked toGDP advancement and the subsequent increased desire for more variety

of fresh produce. In developed markets the need for shelf life, quality andconvenience means consumers are willing to pay significant premia forhigh-quality produce.

One of the largest challenges facing specialty crops is the availability of labor.With high levels of production taking place in emerging markets, increasing levelsof urbanization make it hard to attract labor into this sector thereby accelerating

the need for technology advancement in crop management programs.

Five major cropsrepresent ~ 45% of thetotal farmgate value

China is the largestproducer of cotton, mostof it used domestically.

The United States is thelargest exporter

Potatoes are the third

largest food crop afterrice and wheat

Potatoes produce twotimes more calories per

liter of water than rice

North America Potato, cotton, citrus, pome

Europe Grape, potato, citrus, pome

Latin America Cotton, citrus, banana, coffee

Asia Pacific Potato, cotton, pome


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Technology in agriculture 04

Traditionally the agricultural industry has operated under a single productparadigm. That is to say the global agribusiness enterprises were mainly focusedon launching the best individual products within a single technology stream be it crop protection, seed care, seeds or traits. Consequently growers had torely mainly on their own judgment and knowledge in combining such products

in order to address specific challenges which they faced.

Farmers, however, operate in an increasingly challenging and complexenvironment where single product solutions are no longer sufficient to addressweed, pest and disease pressures so that they continue to increase outputto meet high levels of demand while supporting the environment. In addition,

more stringent controls from governments, consumers and regulators bringfurther challenges which must be managed.

Farming businesses have always depended on their ability to combine productssuited to their specific conditions and needs. The best yields that can be obtainedinvolve an integrated approach using better seeds, water efficient technologies,nutrients, pest and weed management and soil conservation. Furthermore,knowledge sharing can increase agronomy skills and build on local practices.

Syngentas response to the evolving needs of farmers across the globe hasbeen to launch a new integrated strategy with those needs at its very heart. Thestrategy recognizes that solutions to complex farmer challenges are no longermet by single products, but instead require innovation to weave together severaltechnologies (both existing and new) in order, ultimately, to bring plant potentialto life.

Evolution of the industry


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Crop protection products protect crops from damage by controlling weeds,disease and insect pressure. The widespread use of newer and more effectiveproducts since the middle of the twentieth century has increased food securityand improved standards of living around the world. Crop protection products

also help to safeguard public health by controlling pests that spread disease topeople and livestock or cause damage to homes and property.

Weeds, insects and disease have attacked food supplies throughout humanhistory. Only very recently, however, has modern science discovered effectiveways of controlling these threats to crop yield. After 30 years of rapid growth inagricultural production, the world can currently produce enough food to provide

every person with more than 2,700 kilocalories per day; this level would ensureadequate food for all if distribution distortions did not exist.

Since 1975, when the population was four billion people, crop protectionproducts have been essential in order to produce enough to feed the globalpopulation.

Crop productivity improvements since 1961 have forestalled habitat conversionto farmland of some 980 million hectares globally; an area roughly the size ofthe total land area of the United States. Crop protection products are absolutelyessential for raising yields and keeping pace with rising demand withoutencroaching on the environment.

Without crop protection,~40% of the worlds foodwould not exist

The role of crop protection


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Corn Wheat

Relationships of current France and Russia yield

10 t/ha 6.6 t/ha

Current yield in RussiaCurrent yield in France

4.3 t/ha2.3 t/ha


Crop protection: market overview

In a little over 60 years since its inception, the crop protection industry hasgrown from nothing to a market of more than ~US$ 46 billion in 2011. Fromthe 1970s through to the 1990s, growth was fuelled by the introduction of newchemistry which addressed many unmet agronomic challenges faced by

growers, resulting in significantly improved yields. France was an early adopterof crop protection products and today produces average corn yields around10 tons per hectare. This contrasts sharply with agricultural markets still in theprocess of adopting crop protection products, such as Russia where cornproduction averages four tons per hectare.

More recently, the long-term factors driving the crop protection market have

been: variable commodity prices impacting farm incomes in the major developedmarkets; the impact of farm subsidy reforms; economic development inemerging markets such as Latin America and Eastern Europe; and the uptakeof biotechnology, predominantly in the Americas.

The global market for agrochemical products, including non-crop uses suchas professional pest management, was valued at ~US$ 52 billion in 2011,a growth of ~13% compared to 2010, an increase of around 30% comparedto 2007 and more than doubling since 2000.

Source: Syngenta estimates

The crop protectionindustry was valued at~US$ 46 billion in 2011

The global agrochemicalmarket has grownaround 30% since 2007as growers focused onincreasing productivity


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Crop protection products

Selective herbicides 30%

Fungicides 28%

Insecticides 23%

Non-selective herbicides 13%

Seed treatment 6%

2011 global crop protection market by product

~US$46

billion

Herbicides control weeds that compete with crops for light and nutrients.Without weed control, crop yield can be significantly reduced. Weeds can

also cause further problems by harboring pests and diseases, interfering withharvest operations, and increasing costs of cleaning and drying the cropproduce. Herbicides reduce the need for cultivation and can also prevent soilerosion and water loss. Herbicides can be divided in two categories: Selective herbicides: can be directly applied on specific crops to controlparticular weeds without damaging the crop.

Non-selective herbicides (NSH): eliminate all plants (if absorbed by greentissue). Some NSHs can now be used in the same way as selective herbicideson crops that are genetically modified in order to make them tolerant tospecific herbicides. Growers also use non-selective herbicides when preparingfields for new plantings, thus avoiding the need to plough the land. No-tillagriculture of this sort maintains soil structure and thus prevents erosion, aswell as reduces emissions from ploughing tractors.

Fungicides

Fungicides prevent and cure fungal diseases which can have severe adverseeffects on crop yield and quality. The main markets today are fruits andvegetables, cereals and rice. Plant diseases are caused by a great variety ofpathogens. Accordingly, this requires many products used in combination

or series to control the full range of problems in ways that minimize the chanceof resistance building up.

Insecticides

Insects such as caterpillars and aphids can significantly reduce crop yield

and quality through their feeding. Insecticides help minimize this damageby controlling insect pests. The largest insecticide markets are in fruits andvegetables, cotton, rice and corn. In addition to their use in agriculture,insecticides play an important role in public health programs to control insect-transmitted diseases like malaria.

Seed treatment

Seed treatments are chemical or biological substances or physical processesapplied to seeds or seedlings. They help to protect the seeds and assureoptimum emergence of the crop. Application of a chemical to seeds is a verywell-targeted method of reducing pest and disease attacks on the growing plant.

Source: Syngenta

Without fungicides,yields of most fruits andvegetables would fallby 5090%, making freshproduce unaffordableto many

Herbicides


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Beyond traditional crop protection

Abiotic stress reducesagricultural potential

by at least US$ 100 billionper year

United States 2012: 43%of farms experiencedsevere drought; averagecorn yields 16% lowerthan last year

With the need for food security and sustainability becoming ever greater, thescience of crop protection is opening up new and exciting possibilities thatwill enhance the tools available to growers. They share a feature: they all offerthe potential to help us reduce the environmental footprint of agriculture as

complementary tools to traditional agricultural chemicals. They can be classedinto five broad groups.

Biologicals

Biologicals include naturally occurring organisms (e.g. insects, bacteria, fungior viruses) that can be harnessed into effective crop protection or stimulantproducts. They offer growers new modes of action which are instrumental inhelping to combat insect or disease resistance. Some biologicals are also ableto address problems not fully resolved by chemical products available today(e.g. soybean cyst nematodes), and thus offer an important complementary toolfor fruit and vegetables.

Crop enhancement

Simply put, crop enhancement seeks to address environmental stress throughdevelopment of new technologies to enable plants to realize their full potential.Abiotic stresses such as drought, heat, cold and other local stresses, reduceagricultural potential for growers by US$ 100 billion per year.

Over the years, growers and scientists observed and discovered the benefitsof chemical products as well as biostimulants, to help plants withstand difficultgrowing conditions and to deliver better yield, improved quality or greater stresstolerance. For example, the chemical active ingredient azoxystrobin (traditionallyused as a fungicide to control diseases) when used in many crops leads toenhanced root and/or leaf growth, giving an additional yield improvement overthe disease control benefit.

Nutrient efficiency

Nutrient availability in soils can be variable, resulting in plants not fulfilling theirfull potential. Innovative products designed to boost nutrient solubility in soilsand nutrient availability in crops are becoming more available. Such productscan help optimize the amount of fertilizers that need to be added to soils,

increase yields and improve sustainability of crop production.


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Today, modern farming benefits from a wealth of analysis and data e.g. field

topography, soil analytics, microclimate weather analytics and production history.Compiling and converting this data into meaningful information specific to aparticular grower environment is now becoming possible. Such information canthen be further developed into integrated and actionable grower advice suchas product recommendation and application instructions.Complementing availability of advanced information and advice are new

advances in delivery technologies. For example, a particular crop protectionapplication protocol may be recommended based on information availableat a given t ime and in the United States product delivery is

Our Industry 2013 Syngenta

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